EPA’s permits threat has industry scrambling

The EPA told dozens of Texas refiners and chemical and plastic makers to begin taking steps to fix flaws in their air pollution permits in December or else. The threat apparently worked.

All but three of the 74 companies have informed the Environmental Protection Agency that they will bring the state-issued permits into compliance with federal law within the next year.

The response suggests the heated fight over Texas’ so-called flexible permits has cooled, said Al Armendariz, the EPA’s administrator based in Dallas.

“They understand these permits are an anomaly,” he said, adding that none of the companies has indicated that it will sue to keep its flexible permit. “It’s now a question of how do they fix them instead of whether they should.”

While industry makes nice with the EPA, Austin is still battling the federal agency.

Texas has filed suit to block the EPA’s disapproval of flex permits, asserting that there is no legal or technical justification for the federal agency’s action.

“It’s interesting that these companies are recognizing the EPA’s authority when TCEQ isn’t,” said Elena Craft, a Texas-based scientist for the Environmental Defense Fund. “At least someone is paying attention to the reality of the situation instead of being in this imaginary world where Texas doesn’t follow the rules of the rest of the country.”

The EPA rejected the state’s use of the permits in June, saying they fall short of the federal Clean Air Act’s requirements. But those with the permits reacted slower than Armendariz liked, so he threatened fines and other penalties if they did not move by Dec. 22 to resolve their permits.

The EPA would not say which companies failed to meet the deadline because of the possibility of taking enforcement action against them. But Armendariz said his staff had heard from the 30 largest permit-holders, which account for roughly 90 percent of emissions released under flexible permits.

Pam Giblin, an Austin-based Baker Botts attorney who represents many large flexible permit holders, said industry waited to respond until the EPA had explained how to make their permits comply — and not in protest.

“Everyone wanted clarity of the process,” Giblin said. “They didn’t want to go from one problem to another.”

Environmentalists said the dialogue between the EPA and industry is a good first step, but it’s too early to know if the talks will lead to fewer emissions.

That’s because the EPA and the Texas Commission on Environmental Quality have not reached a final agreement on a regime that would satisfy the federal agency. The state agency issues air pollution permits on behalf of the EPA, but the EPA decides whether the permits are in compliance with federal law.

The permits in question require refineries, chemical plants and other facilities to meet an overall emissions cap but allows them to choose how to do so. Federal rules, however, require plants to limit emissions of certain pollutants from each source within a facility.

Pollutants and permits

The single overall cap, the EPA argues, makes the Texas permits nearly unenforceable and allow plants to emit more than similar facilities in other states. But state officials say the system cuts red tape and pollution without violating federal law.

TCEQ spokesman Andy Saenz said companies “must decide for themselves how to deal with EPA’s overreaching and unnecessary regulatory demands. The TCEQ is not requiring any ‘fix’ but the agency is accommodating any legally viable transition option that flex permit holders may choose to exercise.”

The EPA has encouraged companies to follow the leads of Flint Hills Resources and INEOS Olefins & Polymers USA – both of which agreed to apply for new state-issued permits after negotiating some terms and conditions with the federal agency.

That’s important because the agreements ensure that the state permits will meet federal requirements, said Ilan Levin, an attorney with the Environmental Integrity Project, which has filed legal challenges to some of the flexible permits.

Request for transparency

“The devil is in the details, and the TCEQ hasn’t been willing to guarantee that these be done in a transparent way,” Levin said.

Valero Energy Corp., for example, has asked TCEQ to set limits for each emissions source at its plants, but to leave the rest of the permit alone. The state has issued new permits for five of the San Antonio company’s six Texas facilities, although the EPA has raised concerns about whether the revisions are federally compliant.

Valero spokesman Bill Day said the company is talking with the EPA to resolve their differences.